Dollar falls as U.S. considers Syria weapons plan

The dollar (NYBOT:DXZ13) fell against most of its major peers as Secretary of State John Kerry said the U.S. will explore a Russian proposal for Syria to turn over its chemical weapons while seeking approval for military strikes.

Japan’s currency declined versus a majority of its 16 major counterparts for a second day as minutes of the Bank of Japan’s August meeting showed policy makers agreed monetary easing was taking effect. Australia’s dollar advanced to the strongest in six weeks as Chinese reports added to signs of recovery in the South Pacific nation’s largest trading partner. Norway’s krone jumped after inflation accelerated.

“It’s kind of a risk-back-on situation, aided and abetted by what’s going on in Syria,” Andrew Wilkinson, the chief economic strategist at Miller Tabak & Co. in New York, said in a telephone interview. “The fundamental picture is now a little bit more muddied with regard to tapering. The dollar is a bit softer on those grounds,” he said, referring to the Federal Reserve’s debate on reducing stimulus.

The Bloomberg U.S. Dollar Index, which measures the greenback against 10 major peers, traded at 1,028.05 at 2:46 p.m. in New York after touching 1,026.53, the lowest since Aug. 28.

The yen dropped 0.9% to 133.11 per euro after sliding to the weakest since May 22. Japan’s currency fell 0.8% to 100.34 per dollar after depreciating to the least since July 25. The euro was little changed at $1.3267.

Rand Weakens

South Africa’s rand weakened for the first time in five days, retreating from a four-week high, after the nation’s current-account gap widened more than forecast. The currency dropped 0.4% to 9.9931 per dollar.

Indonesia’s rupiah tumbled on speculation Bank Indonesia relaxed efforts to prop up the exchange rate. The currency fell as much as 3.2% to 11,515 per dollar in the biggest slide since November 2008 before paring losses to trade 0.7% weaker at 11,235 per dollar.

Norway’s krone climbed 1.3% to 7.8615 per euro after a report showed inflation accelerated to 3.2% in August, compared with a median estimate of 3% in a Bloomberg survey of economists.

Currency volatility as measured by JPMorgan Chase & Co.’s G-7 Volatility Index declined as much as 0.05 percentage point to 9.08%, the lowest since Aug. 12. The Standard & Poor’s 500 Index of stocks gained 0.6%.